Exegesis of a Facebook Status War

Note: the following is a note from my Facebook page. I'm reproducing it here just in case Facebook decides to take it down or whatnot.

And now (8/10/09) I'm removing the name (even though the idiot was happy to use his own name when posting this trash) because it's showing up on the first page of a Google search of his name plus his town, and there's no point in hurting his business. And maybe the nimrod will move on. ***sigh***

Some of you may be wondering about the flamewar that just happened on my most recent Facebook status. I thought all of you deserved an explanation for it.

So here I was, minding my own business. Most of the time I'm on my Twitter account, @boloboffin, where it's been a great night watching C-Span, doing this and that. Michelle Bachmann was on the House floor after the Obama press conference, and she's always good for a laugh. So nice night, overall.

And @Atrios, the blogger behind Eschaton, tweets that he's never been arrested trying to enter his house. He's referring, of course, to the Harvard professor who forgot his key in Cambridge, managed to get into his house, and then got arrested by the cops.

I realize I can't quite tweet that, because I've never owned a house to call mine. I've always rented, but I am NOTORIOUS for leaving my keys behind. And in my many attempts to enter my residence or my car, I have never, ever suffered the same fate as Henry Louis Gates.

And I am apt to get mouthy.

So I tweet this message:

Joseph Nobles has never owned a house to be arrested trying to enter
23 minutes ago · Comment · LikeUnlike · via Selective Twitter · follow @boloboffin
And as you can see, I also used the Selective Twitter application here at Facebook to update my Facebook status as well. I don't usually do that, because I resist displaying my political side here. And for those of you saying, "He's resisting? Dude's always being political!", well, yes, I truly am holding back. I kid you not.

Well, five minutes later, the following pops up as a comment.
Alex Jones
I have found that giving cops lip transcends all racial and gender barriers.
18 minutes ago · Delete
Now I don't know Alex Jones (fake name) from Adam. He's a friend of a friend, and we were commenting together on that friend's page, and we Friended through Facebook for whatever reason and life progressed.

And I realize that my status has popped up on his feed. That's out of my control, I guess. I don't know that I've ever seen a status of his pop up on mine, though. I don't know how that algorithm works here at Facebook - it's a mystery to me how some will pop up and some won't. People I'm actually interested in here about skate on by at times. Ah, well.

And I suppose that what I've written might be confusing. Perhaps this person doesn't realize that my opinions are quite, quite liberal and that I support Mr. Gates completely in this matter.

And, like I say, I try to keep my politics out of people's faces here. If people want it, well, I'm happy to provide it - like I say, I Twitter and have even been known to blog at Bolo Boffin. And then if I do post at somebody's Facebook page, it's going to be family who have to put up with me even if I hack them off.

Because the way I figure it, Facebook is an unusual creature, but people should understand that your profile is your space. You don't go onto someone's space and hack them off intentionally. I am reminded of a friend of mine here in Dallas who I teased about a recent tattoo he'd added. Personally I like tattoos (thought I don't have one) and I like this guy a lot. But he took it wrong, deleted the comments, and let me know really quick that he didn't appreciate it, whereupon I hastened to apologize and let him know my true feelings on the subject. And he was right to do what he did. I was insulting him in his space as he saw it. We got that straightened out because I understood why he felt the way he did.

So I thought, "I'll make it clear which side of the issue I come down on. Alex will certainly see that he's being invasive. And we'll see what happens from there."
Joseph Nobles
I've found that showing cops my ID w/ correct address generally establishes my right to be in my domicile
13 minutes ago · Delete

Alex Jones
It's just when you show them your id while yelling...Is it because I'm a white man? Who are you? Get the hell out of my house...the white man has had it with the rousting...what is your name? I will own you...you whitey hater.
11 minutes ago · Delete
Mr. Jones' description of the events surrounding Prof. Gates' arrest are factually inaccurate. Gates did give the officer a little lip, but then did show his ID with correct address. At this point it is clear to the officer that Prof. Gates is in his house, that there was no breaking and entering.

And Gates began to ask for his name and badge number.

Which the officer refused to provide. And Gates followed the officer as he left the house. He found the officer outside with other police officers, and demanded the man's badge number and name again.

And THAT is when he was arrested for being disorderly.

If he had been white, people like Alex Jones would have been outraged. Gates was in HIS house. Gates was asking a police officer for his name and badge number, something to which he was entitled.

But fine outstanding white Southern gentlemen from Birmingham, Alabama like Alex Jones see things a little differently when African-American men get mouthy. That will never do.

And as you can see, Alex clearly doesn't care that he's soiling my wall with his filth.
Joseph Nobles
I fucking dare you to produce a link with that transcript. The man was in his house, you ignorant cracker.
9 minutes ago · Delete

Alex Jones
Well, I might have resorted to some hyperbole :-)
8 minutes ago · Delete

Alex Jones
And yes, I did see him on Black in America 2 and he did establish that there was some exchange.
7 minutes ago · Delete
To tell the truth, that surprised me at the time. I didn't think, "Alex's a happy troll: he's gotten his reaction and he's bathing in it." I thought, "Oh, wait, maybe my anger's misplaced. Maybe he'll turn out to be reasonable and we'll get this straightened out." Because, after all, there was an exchange. Perhaps Alex will check into this, see that his take was a little off, apologize to me, I'll apologize to him, and we'll both be the better for it.

So I tried to figure out the next thing to say, and as I did, I began to figure out how I knew Alex Jones (I didn't), who he was (some director in Birmingham), who was our connection (a dear sweet friend, oh, I apologize to you for this, please don't get caught in the middle), etc. And finding out he had no idea who I was cinched it for me. Alex Jones was an idiot troll. I was right the first time.

So getting back to my profile, I find this:
Alex Jones

That may be true, but Gates broke two cardinal rules for success while Black in America (something Soledad O’Brien may not have time to cover in this month’s CNN special). Rule Number One: Don’t get angry. Rule Number Two: Don’t get angry when police are present. Case in point: The BOSTON GLOBE reported that the “normally-mild-mannered professor” become irate when, according to the police report, an officer suggested he come outside of his home to discuss the dispute. “Ya, I'll speak with your mama outside,” Gates allegedly said. When police asked for identification, the report says the professor became visibly upset and asked, “Why, because I'm a black man in America?''
4 minutes ago · Delete

Alex Jones
Point, Set, Match
3 minutes ago · Delete
I had asked rather rudely for Mr. Jones to provide a transcript showing his version of events to be basically correct. This is what he linked to.

Feel free to read it. I recommend the link highly. But as you can see, it does not confirm his version of events at all. In fact, Mr. Jones' link to this is quite cynically done. You see, The Root is an African-American webpage explaining exactly why Gates was arrested: he lost his cool, something African-Americans are not allowed to do with police officers, not even if they are just home from a long trip, feeling sick, and having to deal with a lost key. Henry Louis Gates lost his cool, and, bam, the handcuffs went on. The article is bitterly deriding the reasons for the arrest.

But Mr. Jones linked to this article because he exults in this bitterness. He's happy to know that the unspoken rules are still in place for African-Americans in America. Even with Barack Obama in the White House - no, especially because of Barack Obama, it is good for fine upstanding white Southern gentlemen from Birmingham, Alabama to discover that an African-American Harvard professor can still be arrested for getting angry with a police officer who refused to give his name and badge number, that this "uppity" black man can be arrested on the porch of his own house for such an offense.
Joseph Nobles
Oh, so you're a fucking LYING ignorant cracker. Welcome to my Block list, asshole.
2 minutes ago · Delete
And he's the only person on my Block list. Perhaps this note will net me a few more. That's fine. People more in sympathy with Mr. Jones' demonic frolicking can block me as well. Good riddance to them.

And... soapbox dismount.

Wired: The Formula That Killed Wall Street

Probably the best article that I've read so far explaining how Wall Street got into the mess that it did:
A year ago, it was hardly unthinkable that a math wizard like David X. Li might someday earn a Nobel Prize. After all, financial economists—even Wall Street quants—have received the Nobel in economics before, and Li's work on measuring risk has had more impact, more quickly, than previous Nobel Prize-winning contributions to the field. Today, though, as dazed bankers, politicians, regulators, and investors survey the wreckage of the biggest financial meltdown since the Great Depression, Li is probably thankful he still has a job in finance at all. Not that his achievement should be dismissed. He took a notoriously tough nut—determining correlation, or how seemingly disparate events are related—and cracked it wide open with a simple and elegant mathematical formula, one that would become ubiquitous in finance worldwide.

For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.

Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li's formula hadn't expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system's foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.
I finally got what tranching is from this article, and the explanation of how Li's formula was used by the financial world to blind themselves to risk is stellar.

And the article isn't hard on Li at all. It's not like he's John Yoo, out there perverting the Constitution so Bush could play Jack Bauer. Even he warned against the shortcomings of his formula.

Something keeps bothering me about all of this.
The CDS and CDO markets grew together, feeding on each other. At the end of 2001, there was $920 billion in credit default swaps outstanding. By the end of 2007, that number had skyrocketed to more than $62 trillion. The CDO market, which stood at $275 billion in 2000, grew to $4.7 trillion by 2006.
Should this fact in and of itself be a red flag to people? How can two associated markets grow 6740% and 1710% respectively in five or six years and somebody not say, "Whoa, whoa, whoa," especially when the one growing 6740% is basically unregulated? Are there no adults that could see that and think, "What are those crazy kids doing over there?"

I'm thinking that, although the article didn't say it, Li's formula amounted to a dangerous procyclical effect in the markets. Procyclicality is bad news. It turbocharges the effects of the market. An example in the physical world: let's say the market is a roller coaster. The market goes up and down in the normal course of events, just like the roller coaster. Some markets are kiddie rides, and some are whacked-out scream machines. But you know the risks when you get on them.

Well, supposing that instead of seats on the little trains, the owners of the roller coaster attached contraptions that dangled bungee cords on either side of the little trains? Now every time you go up, you really go up, and when you go down, you're plummeting. That's procyclicality in action.

And now suppose some stupid teenagers with their pot and acid decide to leap from bungee cord to bungee cord, from roller coaster to roller coaster, maintaining that high as long as possible? "Whee! Whee! I'm never coming down! Whee!"

That essentially was our marketplace over the past few years, thanks to the jumbo-sizing of the credit default swap market. And then the the markets went down, and some people hit the pavement in rather ugly messes, and everyone else got the notion that being on a roller coaster dangling from bungee cords isn't such a hot thing to do, they threw the brakes.

And now the roller coasters are stopped, little trains are stuck in every place imaginable, and Geithner and Bernanke are climbing up, disentangling all of these people, getting them back down to the ground...

...and then refunding them the price of admission.

After all, we don't want to stifle innovative recreation park ride creation, now, do we?

Barney Frank Defends Against Idiotic Attacks

As only Barney Frank can.
According to the Republicans' misty memories of the period before 2007, I allegedly singlehandedly blocked their determined efforts to regulate Fannie Mae and Freddie Mac, and my supposed intransigence literally caused the worldwide financial crisis.

Fortunately, we have tools to aid memory -- pencil and paper, word processing, transcripts, newspapers, and the Congressional record. And as described in the most reputable published sources, in 2005 I in fact worked together with my Republican colleague Michael Oxley, then Chairman of the Financial Services Committee, to write a bill to increase regulation of Fannie Mae and Freddie Mac. We passed the bill out of committee with an overwhelming majority -- every Democrat voted in favor of the legislation. However, on the House floor the Republican leadership added a poison pill amendment, which would have prevented non-profit institutions with religious affiliations from receiving funds. I voted against the legislation in protest, though I continued to work with Mr. Oxley to encourage the Senate to pass a good bill. But these efforts were defeated because President Bush blocked further consideration of the legislation. In the words of Mr. Oxley, no flaming liberal, the Bush administration gave his efforts 'the one-finger salute.'
Lots more there, all with Frank's trademark humor. Good on you, Congressman!

Japanese Internment Camp Apologist Degrades Holocaust Warning

Michelle Malkin made her mark defending America's use of internment camps for Japanese-Americans during World War II. She's gone on to screech and villify the left at every opportunity, even appearing to be the heir apparent on "The O'Reilly Factor" until even Bill had to kick her hatred and drama to the curb.

She's still got one of the top-viewed blogs on the Internet, though, and she's leading the charge against the Democrats over the AIG news. She's been instrumental in blaming Chris Dodd entirely for something he did at the behest of the Treasury Department, and then portrayed Dodd as spineless for knuckling under when it was only his relenting that ensured the Obama Adminstration did have a process to try and get that money back.

However, today she's finally found her vicious stride. Today the House Democratic plan for taxing the bonus recipients to get the money back comes under her fire, and her headline is a shocker:
First They Came For The AIG Bonuses
This is of course the bastardization of a famous quote from Martin Niemöller about the hideous inaction of the German people in the face of the Nazi threat.
In Germany, they came first for the Communists, And I didn’t speak up because I wasn’t a Communist;

And then they came for the trade unionists, And I didn’t speak up because I wasn’t a trade unionist;

And then they came for the Jews, And I didn’t speak up because I wasn’t a Jew;

And then . . . they came for me . . . And by that time there was no one left to speak up.
Malkin's appropriation of this poem cheapens it, and all in service of protecting people who got cash even while their company tanked the world economy.

Get your bloody hands off Niemöller's poem, Ms. Malkin. Someone who's spent her life drowning out the people who dare speak up has enough sins to atone for.

The Dodd Mess

Comes Chris Dodd to Hardball to explain how the February 11 language was put into the bill:

So, number one, Chris Dodd knew the language was going in during the House-Senate conference. His staff wrote it in.

Number two, it was at the insistence of Treasury who would otherwise have had the entire section taken out.

Number three, it was a senior administration official telling The New York Times on deep background that Dodd put the language in, while leaving out the Treasury's part in the matter. For what it's worth, Greenwald thinks it was Rahm.

Very depressing stuff to look through here. One of the few bright spots in this:

Still looks more and sounds more like a president than Bush ever did.

Greenwald on Dodd Smear: Obama's Fingerprints

Glen Greenwald has pulled together the best presentation of this yet, and it's clear that the language exempting bonuses before February 11, 2009 in the stimulus legislation was put in at the behest of the Obama administration.

And the smear against Dodd is also coming from the White House:

Yet now, the Obama administration is feeding reporters the accusation that it was Dodd who was responsible for the exemptions that protected already-vested bonuses. The Times article from Saturday that started the Dodd scandal thus contains this outrageously misleading claim:
The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.
And yet another New York Times article from today ("Fingers Are Pointed Across Washington Over Bonuses") -- this one by David Herszenhorn -- contains this White-House-mimicking, misleading passage:
But Mr. Reid mostly ducked a question about whether Democrats had missed an opportunity to prevent the bonuses because of a clause in the economic stimulus bill, part of an amendment by Senator Christopher J. Dodd, Democrat of Connecticut, that imposed limits on executive compensation and bonuses but made an exception for pre-existing employment contracts.
That was the exact provision that Geithner and Summers demanded and that Dodd opposed. And even after Dodd finally gave in to Treasury's demands, he continued to support an amendment from Ron Wyden and Olympia Snowe to impose fines on bailout-receiving companies which paid executive bonuses (which was stripped from the bill at the last minute). But now that Treasury officials are desperate to heap the blame on others for what they did, they're running to gullible, mindless journalists and feeding them the storyline that it was Dodd who was responsible for these provisions. And today, during his White House Press Conference, Robert Gibbs advanced this dishonest attack by repeatedly describing the offending provisions as the "the Dodd compensation requirements."
How in Hades did these "administration officials" think they could get away with it? This is going to be the first real mess that the Obama White House has gotten themselves into, full fledged. Stupid politics, stupid internicene war, stupid all around.

Fox News Smears Chris Dodd -- Did NOT Grandfather AIG Bonuses

There has been a lot of fury expended over the past few days about the bonuses AIG executives in the derelict Financial Products division received, and rightfully so. However, Fox Business has published what it considers a scandalous story. According to them, Chris Dodd inserted language into the stimulus package bill that protected these bonuses.

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. That amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” -- which exempts the very AIG bonuses Dodd and others are now seeking to tax.
Of course, this is going all over the conservative blogosphere.

Yet funnily enough, the actual text of Dodd's amendment concerning executive compensation doesn't have this February 11th exception in the text. In other words, the Fox Business smear merchants didn't bother to do any basic research. They knew Dodd had submitted this section through amendment, and there the language is now, so Dodd must have put it in there, right?

Well, no. Actually Dodd's amendment was to another amendment to the main bill, Amendment 98. Amendment 98 was a substitute amendment, so called because it wipes out the language of the bill or amendment it is "amending" and substitutes its own. Dodd's amendment to #98 did pass, but the original amendment was withdrawn later on.

The final bill passed by the Senate on February 10 was the text of another substitute amendment (#570) submitted by Republican senator Susan Collins of Maine. It did have the language of Dodd's Amendment 354, but the grandfather clause currently giving Dodd-haters the vapors is still not in there.

That language was not inserted until the House-Senate conference to reconcile differences between the bills. This was the next day, February 11, 2009, and funnily enough, that was the date used to grandfather these bonuses in. And since Dodd was not one of the conferees working out these details, it remains to be seen just how he was supposed to have inserted this language.

The actual conferees were, from the House: Obey, Rangel, Waxman, Lewis (CA), and Camp -- and from the Senate: Inouye, Baucus, Reid, Cochran, Grassley. Of these, four are Republicans -- Grassley, Cochran, Lewis, and Camp.

There is no indication whatsoever that Chris Dodd had anything to do with this clause. Consider this right wing lie debunked.

AIG Names Names

The gig is up and Congress' questions are answered. AIG has released names and numbers for who got what from them directly and from Maiden Lane II and III.

Maiden Lane II was dealing with unwinding loans made on good assets to buy up toxic assets.

The top beneficiaries of payments tied to the unwinding of the securities lending portfolio were Barclays (BCS) of the U.K., with $7 billion, Deutsche Bank, with $6.4 billion, BNP Paribas of France, with $4.9 billion, Goldman with $4.8 billion and Bank of America (BAC, Fortune 500) with $4.5 billion.
Maiden Lane III was buying bad toxic assets from institutions that had purchased credit default swaps from AIG on those toxic assets:
...the top recipients of payments under the CDO purchase program, with SocGen getting $6.9 billion, Goldman $5.6 billion, Merrill $3.1 billion and Deutsche Bank $2.8 billion.
And finally, those same institutions who sold their toxic CDOs to Maiden Lane III were made whole through payouts from AIG that also terminated the CDSs:
The top recipients of CDS-related collateral were France's Societe Generale, with $4.1 billion, Germany's Deutsche Bank (DB), with $2.6 billion, and Goldman Sachs and Merrill Lynch of the United States, with $2.5 billion and $1.8 billion.
I wonder what the Wall Street Journal was looking at, though. They said the biggest two recipients were Goldman and Deutsche Bank, but by far the biggest recipient of taxpayer cash from AIG was Societe Generale, with $11 billion coming through Maiden Lane III and AIG directly.


The video of the uncut interview is available at the Daily Show site, because their code is screwing up my blog. Bleh.

My take on this is one I've seen elsewhere: why does it take a comedian to ask these kinds of questions? And how does Cramer defend himself? At the end he was a whining fifth grader, asking for another chance to let him at those lying CEOs. But he kept saying, "These guys were friends of mine and they lied to me." Well, the reason Cramer bought the lies instead of doing investigative reporting is because they were friends of his.

Again and again, it comes down to access. Who tends to get the access? The people who are going to tell the best story for the companies. Who tends to get those kinds of jobs? People who are friends of the CEOs.

In the uncut version, this exchange occurs:

JIM: There's a market for it and you give it to them.

JON: There's a market for cocaine and hookers.

JIM: Well --


JON: So what?

JIM: I think those should be legalized -- no.

JON: What is the responsibility of the people who cover Wall Street?
Making sure that the people who are pushing cocaine and hookers don't have the chance to swamp the global financial market sounds like a good start to me.

Roubini: The Ponzi Economy

Combine this insight with Bernanke's stressing of savings relative to investment below:

According to Minsky and according to economic theory Ponzi agents (households, firms, banks) are those who need to borrow more to repay both principal and interest on their previous debt; i.e. Minsky’s "Ponzi borrowers" cannot service neither interest or principal payments on their debts. They are called "Ponzi borrowers" as they need persistently increasing prices of the assets they invested in to keep on refinancing their debt obligations.

By this standard media US households whose debt relative to income went from 65 percent 15 years ago to 100 percent in 2000 to 135 percent today were playing a Ponzi game.

And an economy where the total debt to GDP ratio (of households, financial firms and corporations) is now 350 percent was a Made-Off Ponzi economy. And now that home values have fallen 20% and they will fall another 20% before they bottom out and now that equity prices have fallen over 50% (and may fall further) using homes as an ATM machine and borrowing against it to finance Ponzi consumption is not feasible any more. The party is over for households, banks and non-bank highly leveraged corporations.

The bursting of the housing bubble and of the equity bubble and hedge funds bubble and private equity bubble showed that most of the "wealth" that supported the massive leverage and overspending of agents in the economy was a fake bubble-driven wealth; now that these bubble have burst it is clear that the emperor had no clothes and that we are the naked emperor. A rising bubble tide was hiding the fact that most Americans and their banks were swimming naked; and the bursting of the bubble is the low tide that shows who was naked.
I'm sitting here happy that my credit has been crap for years. I never took out any liar's loans. It scares me to even think I could have before the bubble burst. My major debts right now are student loans, which I'm repaying slowly.

It is hard to see how this economy gets better anytime soon, when the best solutions to the problem are so politically untenable or simply undoable (nationalize the banks which, among other obstacles, the FDIC could never back up right now).

Look What's Going Viral

Cat On A Hot Tin GOP

Michael Steele is now busy walking back his pro-choice comments made in an interview for GQ four days before he called Rush Limbaugh an entertainer with an ugly act. No, not his Viagra-fueled tour to a sex tourism paradise, his radio act:
I tried to present why I am pro life while recognizing that my mother had a "choice" before deciding to put me up for adoption. I thank her every day for supporting life. The strength of the pro life movement lies in choosing life and sharing the wisdom of that choice with those who face difficult circumstances. They did that for my mother and I am here today because they did. In my view Roe vs. Wade was wrongly decided and should be repealed. I realize that there are good people in our party who disagree with me on this issue.

But the Republican Party is and will continue to be the party of life. I support our platform and its call for a Human Life Amendment. It is important that we stand up for the defenseless and that we continue to work to change the hearts and minds of our fellow countrymen so that we can welcome all children and protect them under the law.
"The strength of the pro life movement lies in choosing life and sharing the wisdom of that choice with those who face difficult circumstances." So the strength of their position is that they acquiesce their politics and agree that the choice movement is correct. They then work to convince women to choose life. From your lips to God's ear, Michael, but he's the only one who's going to be listening to you in a couple of weeks.

Shoe Thrower Gets Three Years

It should have been three months or time served.
The Iraqi journalist who threw shoes at then-President George W. Bush was convicted Thursday of assaulting a foreign leader and sentenced to three years in prison, lawyers said. He defiantly shouted "long live Iraq" when the sentence was read.

Muntadhar al-Zeidi's bold act in December electrified many across the Middle East who consider him a hero for expressing his anger at a president who is widely disliked for his decision to invade Iraq in 2003.

The 30-year-old journalist pleaded not guilty to the assault charge Thursday, telling the three-judge panel that "what I did was a natural response to the occupation."

Reporters and family members were then ordered out of the courtroom for the verdict, which was relayed to them by defense attorneys and a court official.
People who engage in civil disobedience should expect to serve out their terms. That's part of the point. But this sentence was excessive and meant to squash dissent in Iraq. When you squash out dissent, it festers and boils out in worse ways.

This whole incident displayed one of the very few traits I like about Dubya. He dodged the shoes and shook it off. He kept explaining to the Iraqi government that he didn't care, that he wasn't offended, and all of that was obviously in an effort to mitigate the reaction of the Iraqi government. It didn't stop them from severely beating al-Zeidi or this harsh sentence, but it could have been worse, I suppose.

No one can deny the passion in the man or the passion he aroused. A gesture that viral can't be clamped down on. You've got to err on the side of allowing free expression like this.

The AIG Bailout

More details from a whitepaper published on the fifth of March:

On February 28, 2008, American International Group, Inc. (AIG), the largest insurance company in the United States, announced 2007 earnings of $6.20 billion or $2.39 per share. Its stock closed that day at $50.15 per share. Less than seven months later, however, AIG was on the verge of bankruptcy and had to be rescued by the United States government through an $85 billion loan. Government aid has since grown to $200 billion. AIG's stock currently trades at less than $1.00 per share.

The Article explains why AIG, a company with $1 trillion in assets and $95.8 billion in shareholders' equity, suddenly collapsed. It then details the terms of the government bailout, explores why it was undertaken, and questions its necessity. Finally, considering a likely legacy of AIG is increased regulation of credit default swaps, the Article describes the current regulatory landscape for CDSs, advocates restoring Securities and Exchange Commission power to regulate them, but cautions against regulating before the CDS market has had a chance to self-correct.
I'm about halfway through, so I don't know about the conclusions. I do like the very cogent description of the mess AIG is in.

How Paulson Used AIG To Throw Goldman Sachs A Big Old Bone

Among a lot of others, mind you.

It's in the WSJ today and branching out from there -- several of the counterparties receiving par payouts for their toxic CDOs now owned by the taxpayers have been identified. The first name on the list is Goldman Sachs:

Among those institutions are Goldman Sachs Group Inc. and Germany's Deutsche Bank AG, each of which received roughly $6 billion in payments between mid-September and December 2008, according to a confidential document and people familiar with the matter.

Other banks that received large payouts from AIG late last year include Merrill Lynch, now part of Bank of America Corp., and French bank Société Générale SA.

More than a dozen firms with smaller exposures to AIG also received payouts, including Morgan Stanley, Royal Bank of Scotland Group PLC and HSBC Holdings PLC, according to the confidential document.
This is big news because the vice chairman of the Fed, Donald Kohn, would not identify any of these companies when he appeared before the Senate Banking Committee on Thursday.

However, it was already known that Goldman Sachs, Societe, and Deutsche Bank had gotten a big payout from the AIG debacle, as this December 17 article from Business Week shows.

I've been trying to understand what happened here. Putting the Business Week article together with the Kohn testimony and this summary of part of the deal and other sources, you get a clearer idea of just how billions in TARP money has been funneled to these institutions. And it stinks.

To help explain what's happened, I've prepared a PDF presentation of this, relying mostly on Kohn's testimony. You can access it at my unrelated website here (pdf).

Let's go back a bit to when Bear Stearns went under. The Federal Reserve worked together with JPMorgan Chase to get JPMorgan a great deal. The Fed created a limited liability company in Delaware, named after the street the New York Fed bank is on, Maiden Lane. Maiden Lane, LLC, received $29 billion in loans from the Fed, and $1 billion in loans from JPMorgan. Maiden Lane used that money to buy up the toxic assets at the heart of Bear Stearns' woes. JPMorgan Chase then purchased Bear Stearns, free of the toxic assets with $30 billion sitting there all nice and tidy. And then JPMorgan bought Bear Stearns at $10 a share (although, remember, Hank Paulson wanted them to sell at $2).

Now this whole deal stunk mightily in the nostrils of Congress, and they saddled the Federal Reserve with some more strigent restrictions on how they deal out the money. And Maiden Lane, LLC, has actually lost $5 billion in value since that time. But that didn't stop them from pulling out the old playbook when AIG came staggering in through the door.

Well, what else was the Fed going to do?

AIG is actually a quite stolid and no-nonsense company for the most part. But one of its arms, AIG Financial Products (AIGFP), was described recently by Ben Bernanke:
"If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG," Bernanke told lawmakers today. "AIG exploited a huge gap in the regulatory system, there was no oversight of the financial-products division. This was a hedge fund basically that was attached to a large and stable insurance company.
What AIGFP was pretty wild. First they took out loans on stable assets owned by AIG and used that cash to invest in what would become toxic assets -- the collateralized debt obligations (CDOs) that have become so familiar to ordinary Americans nowadays. These are the complex financial instruments that all sorts of mortgages had been bundled into, sliced up, and rebundled to help minimize risk. AIGFP bought up a lot of them.

They also had friends out there doing the same thing. These companies wanted a kind of insurance on their CDO's, so AIGFP sold them credit default swaps (CDSs). This meant that AIG would be responsible for losses on the CDOs after a deductible of sorts was reached. But since they were all as safe as houses, the money being paid into AIGFP was a windfall. Money for everyone, and all granted under AIG's Triple A credit rating. Nice of them to lend that out to the underregulated, loophole-exploiting Financial Products arm, don't you think?

Of course, the housing market started to tank. And the truth is, AIG had been trying to extricate itself from this godawful mess for a while. They stopped issuing these types of deals back in 2005 when they started feeling squishy about them. They'd been working with regulators to unwind all of this mess.

But then a crisis point was reached. The counterparties who held the loans on their stable assets were starting to ask for their money back. The counterparties who'd bought credit default swaps on their toxic assets were losing cash and starting to call in their CDSs. And AIGFP had not set aside any capitalization against those CDSs -- they didn't have to! They weren't technically insurance. They were derivatives. And AIGFP was having difficulty selling their own toxic assets to meet their obligation to these two sets of counterparties.

This is the essence of a liquidity crunch. The cash has seized up. AIG needed help fast and a lot of it.

On September 16, 2008, the Federal Reserve provided AIG with a huge line of revolving credit. They created a facility with the quirky name Revolving Credit Facility. They put $85 billion inside this facility and opened up a window for AIG. This was the plan -- AIG draws on the credit as they have need to satisfy their obligations. Over time good assets get freed up and/or toxic assets become good boys and girls again. By selling these assets, AIG could then pay back the Revolving Credit Facility. And it had two years to do so, and then, poof! The Revolving Credit Facility is no more and AIG has learned a very important lesson.

And just to make extra sure that the government wouldn't lose any money in the deal, AIG had to place 79.9% of preferred convertible stock into a trust payable to the Treasury. The important thing here to know about preferred convertible stock is that if the Treasury decides to, it can convert this preferred stock into common stock, which means the Treasury really does own a massive controlling interest in AIG at that point.

So that worked, right? Not quite. By October 1, AIG had already drawn out $61 billion of the $85 billion available to it. Yes, you read that right. Two weeks later.

The toxic CDOs were getting worse and worse. They still couldn't sell their own, and the cash collateral calls from the counterparties from whom they'd borrowed were stacking up and the CDSs were mounting as well.

So the Fed took some further steps. They created a second facility for AIG, the Secured Borrowing Facility, that allowed several AIG subsidiaries to borrow up to $37.8 billion more to pay off the cash collateral calls. This was only a temporary fix, meant to buy AIG time to start selling assets and get their own cash flow running again.

Do you think it worked? Does a bear poop in the Vatican?

By November, the economic crisis was deepening and AIG was about to lose its Triple A credit rating. That would have mean immediate needs to pump up their available capital, with more collateral calls and more people bailing out of other financial arrangements. Plus, they did have this thing called actual insurance that they did occasionally like to sell to people, and that business was drying up fast as well. AIG was barely hanging on.

But by November, Hank Paulson had gotten his $700 billion in the Troubled Asset Relief Program and the wheeling and dealing had begun. Bernanke was spitting nails already about the whole situation, so the two of them got together and start thinking about restructuring the entire AIG bailout.

They came up with this. First, Bernanke capped the first facility from September, the Revolving Credit Facility, at $60 billion. He also lowered the interest rate AIG paid on this money and stretched out the loan term to five years. But AIG had to post all proceeds from asset sales into this facility and pay off the $60 billion.

Paulson agreed to give AIG $40 billion in TARP funds in exchange for $40 billion in Senior Preferred Stock in AIG. Fancy!

Then the Fed created two more Maiden Lane corporations, Maiden Lane II and Maiden Lane III. Paulson funded both of these institutions with TARP funds and then both started dealing with AIG's major problems, their own toxic assets and the CDSs on other counterparties' toxic assets.

Maiden Lane II got $20 billion in TARP funds from the Treasury. It went to the AIG subsidiaries that had been borrowing from the Secured Borrowing Facility created in October by the Fed. In exchange, the subsidiaries forked over the toxic assets they held. They were worth $40 billion at par (what AIG paid for them in the first place) but AIG only got $20 billion for them. They took the hit themselves, writing off the rest, and then paid back the Secured Borrowing Facility what they had borrowed.

And, poof! The Secured Borrowing Facility was terminated.

Maiden Lane II has 6 years to repay the TARP money to the Treasury. Its only holdings are these toxic assets bought at about 50 cents on the dollar, so the Fed is betting that the assets will at least be worth that $20 billion plus interest in six years. If there's any money left over after the Treasury is paid off, the Fed gets 67% of that and AIG gets 33%. Cross your fingers!

But it's Maiden Lane III that is the real piece of work. Keep your eye on the ball...

Maiden Lane III has been funded with $25 billion of the TARP funds (under the same terms as Maiden Lane II), and AIG was told to kick in $5 billion as well. Maiden Lane III has gone to to the counterparties that purchased the credit default swaps from AIG and given them an offer they couldn't refuse - all of their money back.

Here's how it worked. There was around $62 billion of toxic assets (at this point) being held by these counterparties. They gave them to Maiden Lane III for the grand total of $25 billion. Sounds bad, right? Sounds like they took a bad loss for buying such crazy assets in the first place, right?

AIG paid them everything else.

That's right. In exchange for terminating the CDSs they held on AIG, these counterparties received every single cent they ever paid for these crappy assets. They got par. Now it may very well be that these counterparties have more CDOs that weren't backed up by AIG's credit default swaps, and could still be in a world of hurt. But how nice was it that Maiden Lane comes along with TARP funds and brokers them a par payment on these crappy derivatives!

AIG, of course, took the hit here as well. $37 billion writeoff here, plus $20 billion writeoff because of Maiden Lane II, and $5 billion paid to Maiden Lane III... well, it's a good thing old Hank, former CEO of Goldman Sachs, plugged $40 billion extra of TARP funds into AIG, because that spectacular net loss of $62 billion in the fourth quarter could have been $100 billion.

And now we know that one of the two biggest beneficiaries of this incredible money shuffle was Goldman Sachs, which got (according to the Wall Street Journal) 10% of the money paid out through this deal.

Goldman Sachs received full par payment of their toxic assets backed up by AIG, $6 billion worth, thanks to the keeper of the TARP funds, Hank Paulson.

How is this not the definition of moral hazard, the dreaded term so hated by Paulson that he actually let Lehman Brothers collapse to avoid it? Yes, Lehman Brothers was one of Goldman Sachs' competitors, now that you mention it. They get the shaft, Goldman gets a great big bone from Paulson, AIG writes off billions, and the taxpayers are left holding the bag.

But wait, it gets better. In the Business Week December article, not all of this money had been thrown around yet. The figures are incomplete. Here, only $15 billion had come from TARP into Maiden Lane III, and with the $5 billion from AIG, Maiden Lane III had purchased only $46 billion from this counterparties at that point in time. So AIG had paid out $26 billion due to its CDS obligations.

The final numbers are $24.3 billion from TARP. Now they leave AIG's $5 billion in Maiden Lane III to guard against loss of asset value. So that left $4.3 billion to buy up $16 billion more in toxic assets. That was about 25 cents on the dollar for those assets. Yay, us. But of course AIG made up the difference to terminate the CDSs, so these companies also got par for this junk.

How are all of these assets performing in the Maiden Lane LLCs? How does Paulson justify throwing that kind of money at his old company? How much did Paulson know about these CDSs? After all, Paulson wasn't Treasury Secretary until the middle of 2006 and AIG had stopped all sales of these CDSs in 2005. In other words, Goldman Sachs got all of their AIG credit default swaps while Paulson was CEO.

Oh, by the way, Goldman Sachs did post a fourth quarter 2008 loss, $2.8 billion. They still managed to end the year with a $2.32 billion profit, though. I guess that $6 billion from the AIG situation really helped out at the end of the day.

I hope we do as well.

TPM: Maiden Lane I, II, and III

Hoo boy. After Bernanke's appearance today in front of the Senate Banking, Housing, and Urban Affairs Committee to deal with the AIG mess, a rather astute observer wrote Josh Marshall with a succinct explanation of what the Fed's been up to. Brace yourself:
Josh, your reporting on the AIG credit default swap/counterparties issue has been spot-on. But to understand what happened there, you have to understand the Fed's "Maiden Lane" vehicles and how it's used them to avoid what Congress intended with TARP, which was the real story that came out of Dodd's hearing on the AIG mess today. And the roots of it go back to the Bear Stearns rescue last year.

By law, the Fed isn't allowed to buy assets -- it can only lend, as lender of last resort. That was a problem for the Bear Stearns bailout, because JP Morgan said it would only buy Bear if someone else assumed responsibility for the crap. Fed came up with this idea to start a shadow company, called a special purpose vehicle (SPVs were how Enron operated, creating "Chewco" and the like named after Chewbacca - the New York Fed called their SPV "Maiden Lane LLC" for name of the street the NY Fed is located on in southern Manhattan). The deal then was JP Morgan put $1 billion into Maiden Lane, the Fed put $29 billion in cash into it. Maiden Lane paid Bear Stearns $30 billion, which went straight back to JP Morgan as this deal happened simultaneously to JP's purchase of Bear. So Morgan got $30 billion in cash ($29 billion net) and the Fed got stuck owning the crap, but was legally only making a loan to Maiden Lane, who was the legal owner (Maiden Lane was incorporated not in NYC, but in Delaware to avoid paying taxes). By the Fed's own accounting - which is very different from a real company's accounting - Maiden Lane has lost $5 billion between its creation and today.

The same problem happened in AIG, but this time there was no buyer. In Sept, the Fed bought AIG (80%) in exchange for an $85 bill loan. By Oct, it was clear AIG was still dying, so the Fed lent it another $40 billion. This $40 billion was restructured in November when the Treasury put in $40 billion of TARP funds, which was needed to bail out the Fed's loan which had by this time gone bad. But essentially AIG had 2 problems: it had lent out safe securities with real values and used that money to buy shit mortgage backed securities -- this was called 'Secured Lending Facility' which was done right under the nose of the state insurance commissioners. It was in the hole $20 billion. The other problem was the crappy insurance that AIG's financial products company had written on other people's shit mortgage backed securities - the credit default swaps (CDS). When the bad mortgages that AIG insured went bad, the insurance had to pay-up -- but because it wasn't called insurance, but rather derivatives, AIG hadn't reserved any money against it. This had lost about $25 billion.

Using the loophole it had learned during Bear Stearns, the Fed set up two new companies: Maiden Lane II and Maiden Lane III. Two dealt with the secured lending and Three the shitty credit default swaps. The Fed lent each Maiden Lane $20 billion and $25 billion and then Maiden Lane paid off the investors that had either lent AIG the money to buy the shitty mortgage backed securities (ML II) and those who had the shitty mortgages and the corresponding insurance (ML III). To avoid booking a loss on the Fed's balance sheet, because the Fed had some legal problems if either of these Maiden Lanes lost money, and because of a reporting requirement that Dodd had put into TARP which actually required the Fed to report to the Congress and the public about the cost to taxpayers from ML I, the Fed did some creative accounting. They still paid all of the investors off at full value (par), so that they didn't lose anything. But they booked the loss on AIG's balance sheet and kept Maiden Lane clean. This is the hidden story behind how AIG went from losing $38 billion during the first 9 months of 2008 to losing $61 billion in the 4th quarter.

This was all exposed at today's hearing. And despite repeated requests from Senators on both sides - Dodd, Shelby, Corker, Warner - the Fed is still refusing to say who it bailed out through Maiden Lane II and III.
I didn't get to hear this today but I'm going to watch as much as I can at C-Span.org. I've embedded the hearing below so you can, too.

I'll be back with more on this once I've seen the video.

Update: It's Donald Kohn, the vice chairman of the Fed, giving testimony, not Bernanke. More up above.

Tumulty: The Health-Care Crisis Hits Home

Karen Tumulty wrote this article for Time. Its thesis was suggested when her brother was diagnosed with kidney failure:

The diagnosis was only the first shock. The second came a few weeks later, in an Aug. 5 letter from Pat's health-insurance company. For six years — since losing the last job he had that provided medical coverage — Pat had been faithfully paying premiums to Assurant Health, buying a series of six-month medical policies, one after the other, always hoping he would soon find a job that would include health coverage. Until that happened, "unexpected illnesses and accidents happen every day, and the resulting medical bills can be disastrous," Assurant's website warned. "Safeguard your financial future with Short Term Medical temporary insurance. It provides the peace of mind and health care access you need at a price you can afford."

...Pat's decision to save some money by buying short-term insurance was a big mistake, says Karen Pollitz, project director of Georgetown University's Health Policy Institute and a leading expert on the individual-insurance market. "These short-term policies are a joke," she says. "Nobody should ever buy them. It is false security that is being sold. It's junk."

That's because diagnosing and treating an illness may not fall neatly into six-month increments. While Pat had been continuously covered since 2002 by the same company, Assurant Health, each successive policy treated him as a brand-new customer. In looking back over Pat's medical records, the company noticed test results from December, eight months earlier. Though Pat's doctors didn't determine the precise cause of the problem until the following July, his kidney disease was nonetheless judged a "pre-existing condition" — meaning his insurance wouldn't cover it, since he was now under a different six-month policy from the one he had when he got those first tests.

After 33 years of wrestling with insurance companies, Deborah Haile, payment coordinator at the San Antonio Kidney Disease Center, where Pat went for treatment, has pretty much figured out the system. So when I put in my first desperate call to her, on Aug. 20, 2008, she offered to make another run at Assurant. Within an hour, Haile called back, her voice bristling with anger. "Cancel that policy," she advised me. "Your brother is wasting his money on premiums, and he's going to need it."
The underinsured, which as Tumulty puts it, is "the shadow problem facing an additional 25 million people who spend more than 10% of their income on out-of-pocket medical costs." And they usually don't realize it until disaster hits. They think they're covered.

John Aravosis of Americablog.com recently discovered how antiquated his prescription drug coverage was when they began denying his asthma medication at the end of last year, and John has the best self-employed health insurance with the most prescription drug coverage available. When he first got the insurance, $1500 a year was adequate. But as the premium rose, the ceiling on coverage didn't and the drugs got more and more expensive. He even discovered that if he used a mail-order company to provide his needed medication cheaper, his co-pay would increase. Can there be a more Walgreen's-friendly rider?

Today President Obama brought together the major players in a White House Forum on Health Reform:

If we want to create jobs and rebuild our economy and get our federal budget under control, then we have to address the crushing cost of health care this year, in this administration. Making investments in reform now, investments that will dramatically lower costs, won't add to our budget deficits in the long term -- rather, it is one of the best ways -- in fact maybe the only way -- to reduce those long-term costs.

Now, I know people are skeptical about whether Washington can bring about this change. Our inability to reform health care in the past is just one example of how special interests have had their way, and the public interest has fallen by the wayside. And I know people are afraid we'll draw the same old lines in the sand and give in to the same entrenched interests and arrive back at the same stalemate that we've been stuck in for decades.

But I am here today and I believe you are here today because this time is different. This time, the call for reform is coming from the bottom up and from all across the spectrum -- from doctors, from nurses, from patients; from unions, from businesses; from hospitals, health care providers, community groups. It's coming from mayors and governors and legislatures, Democrats, Republicans -- all who are racing ahead of Washington to pass bold health care initiatives on their own. This time, there is no debate about whether all Americans should have quality, affordable health care -- the only question is, how?
There are going to be plenty who yell about socialism. These ninnyheads should be ignored. The general welfare of Americans is best served by all of its citizens gaining access to some basic levels and more of health care, and all of our society will be better served by eliminating the scourge of medical bankruptcies. America pays more per capita for health care than any other nation by far, and yet we still rank far below most other industrialized nations in all other leading indicators of a healthy populace. It is time for this state of affairs to end.

The Benefits Of Being Fat

I've been losing weight now since the middle of November. I needed to do it, my cholesterol numbers were looking a little iffy, and I weighed more than I ever had in my life. I was around 225 and actually bought a chair that told me I weighed too much to sit in it safely. That was it. I called up Nutrisystem and started their plan.

Part of the plan is what they call the Mindset Makeover. It's not a plan that brainwashes you to do Nutrisystem. Stop saying that. It's a plan that brainwashes you into thinking in a healthy way about your appetite and your goals. The only thing "Nutrisystem" about it is that it's from them and it has Nutrisystem all over the paperwork. But it's just a way of learning to set goals and follow them through.

But in following it, you have to think through why you're overweight or obese and how to get yourself out of it. And a lot of people on the forums talk about how they slide back into old habits and nothing seems to work. Well, I realized that there's got to be something that's keeping us there, that's keeping us fat. There must be some kind of benefit to being fat that we keep exploiting. And so I thought about it and came up with three benefits of being fat that we have to sacrifice before we are what AA calls "entirely ready" to get on with a lifestyle change like losing weight.

I put this together into a blog post at Nutrisystem, and the response was so positive, I thought I'd put here on my main blog. Enjoy!

I had to say goodbye to smoking. It was like a bad relationship. It took some time, but eventually you can say goodbye to all of it. The good isn't all that great, and the bad is pretty bad, indeed. But I had to be ready to give up what I liked about smoking -- the nicotine, having something to do with your hands, etc. It was only then that quitting smoking finally took.

Well, it's the same thing with being fat. There are benefits to being fat. Let's list them together, shall we?

1. Being fat is a great way to constantly punish yourself.

That's a benefit? Oddly enough, it is. Not everybody is like this, but I fear a great many of us are. I won't go into reasons why we might feel like we need to punish ourselves because I'll bet as soon as you read that sentence, you recognized whether it was true about you or not.

Well, I'll mention one -- one of the worst ones. We deserve to be punished because we let ourselves get this fat! That causes a vicious feedback loop. We need to be punished because we let ourselves get this fat, so we keep shoveling the food in.

So our fat becomes both our sin and our absolution. We learn to put up with the stares, the inconvenience, and the health problems because after all, who put us into this mess? We did! And that becomes an odd comfort -- at least we're shouldering our own cross!

A more rational response to this is to get rid of the fat, get it down to a healthy level. Then you can take a sense of accomplishment from making yourself better and keeping yourself better. Continuing my religious analogy, Jesus was only on the cross three hours, right? At some point, he was finished with it. When are we going to be finished with our cross of lard?

2. Being fat is a great way to protect ourselves from other people hurting us again.

Again, I don't have to go into details here because you'll recognize the truth of this if it applies. It's so much easier to avoid pain if you can convince the pain to avoid you. A great way to make sure somebody who could hurt you stays away is to make sure these people are repulsed by you.

Fat becomes a powerful defensive weapon in this constant struggle. There are others -- avoiding society, anti-social behavior and demeanor in unavoidable society -- but fat ranks right on up there. It's the choice of people who don't really want to avoid society at all (the stereotype of the jovial fat person is based on a kernel of truth, a really large kernel).

However, this is one you probably need some outside help with. When the fat goes away, the shield goes with it, and if you don't fix the root problem, a relapse is one bad scene away.

Hey, tired of all the psychobabble? Here's one we can all agree on.

3. Being fat is just so dang easy to do.

Shoving a pizza down your gullet is the easiest thing in the world to do. Pizzas taste GOOD. They are designed to taste good. We used to have to chase our food around in Africa for days, and now we can put Papa John's on speed-dial. "Yes, I would like my usual with extra cheese sauce." Ding-dong! You're a fat ass.

When you get past the genetic inclination to obesity, you still end up with a lot of lazy fat asses. Fat, after all, is stored energy. To lose it, you've got to burn it. And there's only two ways to start burning all that stored energy -- eat less food and get your body into motion.

I'm finding that my body is losing some muscle along with the fat. The overall trend is a loss in body fat percentage, but it is slow. Part of that isn't so surprising -- I don't need as much muscle because I'm not lugging around all that much fat anymore! Fat people have to be strong because just walking to the mailbox is resistance training!

I love that picture of happyhoward holding onto the two 50 lb bags of dog food. He used to have 100 excess pounds of fat on his body 24/7/365! Folks, you are carrying your gym with you right now. I'm not going to discourage anybody from buying a gym membership or a Wii Fit or a BodyBugg, but you have everything you need to lose weight right now. Find time two or three times a day to walk your home gym around the block. Haul your home gym up the steps instead of parking it in the elevator.

Losing the weight means we lose these benefits of being fat and we have to be ready to give them up. If not, right back up the scale you will go, because it's an established comfort zone. We can help each other be entirely ready to give up these benefits, but in the end it's up to those three people in the mirror: me, myself, and I.

No more self-flagellation! No more hiding! No more stalling! Let's do this.

Just so you know, I started the program November 14, 2009 at 230 (after a nice Goodbye to Food tour). Now I'm down to 190.6 pounds as of this morning.

Cafe Wellstone In Second Life

I'm at the Cafe tonight, after a rather lengthy post I put together at DU. Enjoying some early Randy Newman...

Cafe Wellstone is run by the General of Jesus' General. He got bit by a hobo spider last night, but seems to be much better today. Thank goodness...

I found a smashing Irish hat in my inventory.

It says it's for a lass, but I think it fits a hobbit just fine.

Secret Bush Memos Released

On a Monday. Welcome to the new administration:

The Obama administration threw open the curtain on years of Bush-era secrets Monday, revealing anti-terror memos that claimed exceptional search-and-seizure powers and divulging that the CIA destroyed nearly 100 videotapes of interrogations and other treatment of terror suspects.

The Justice Department released nine legal opinions showing that, following the Sept. 11, 2001, terrorist attacks, the Bush administration determined that certain constitutional rights would not apply during the coming fight. Within two weeks, government lawyers were already discussing ways to wiretap U.S. conversations without warrants.

The Bush administration eventually abandoned many of the legal conclusions, but the documents themselves had been closely held. By releasing them, President Barack Obama continued a house-cleaning of the previous administration's most contentious policies.

The shame in this is not that they are exposed but that they were written in the first place.

On The Subject of Kenneth Pollack

Kenneth Pollack, our intrepid media's example of an Iraqi war opponent, wrote a book called "The Threatening Storm: The Case For Invading Iraq." I have it. I bought it because I saw Joe Lieberman hold that book up in the U.S. Senate as a book we should all read when we consider invading Iraq. He used the book twice in his floor speeches to bolster the case for invading Iraq

It was not just Joe Lieberman. Kay Bailey Hutchison quoted twice from Pollack's book and ensured that certain quotes made their way into the record. Jon Kyl used an article of Pollack's to give us a specific quote: "war now or war later." George Voinovich reminded us all of Pollack's book in his support for an emergency supplemental bill for Iraq and Afghanistan. Even Edward Kennedy cited Pollack when he made his own argument for war against Iraq.

Pollack and his partner in crime, Michael O'Hanlon, are providing political cover for wavering Republicans while trying to salvage their own reputations. In short, this is just more of the same from these two. Don't get fooled again.

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New 9-11 Video: But Larry Silverstein Said "Pull It"!

The latest debunking video I've made available at YouTube, I hope.

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What's Behind The Data-Mining Curtain?

Via Josh Marshall (short post, so that's the whole thing):

As you can see, we now have the first hint of what was at the center of the Ashcroft hospital room showdown. According to the New York Times, what the White House calls the 'terrorist surveillance [i.e., warrantless wiretap] program' originally included some sort of largescale data mining.

I don't doubt that this is true as far as it goes. But this must only scratch the surface because, frankly, at least as presented, this just doesn't account for the depth of the controversy or the fact that so many law-and-order DOJ types were willing to resign over what was happening. Something's missing.

Of course, 'data mining' can mean virtually anything. What kind of data and whose you're looking at makes all the difference in the world. Suggestively, the Times article includes this cryptic passage: "Some of the officials said the 2004 dispute involved other issues in addition to the data mining, but would not provide details. They would not say whether the differences were over how the databases were searched or how the resulting information was used."

To put this into perspective, remember that the White House has been willing to go to the public and make a positive argument for certain surveillance procedures (notably evasion of the FISA Court strictures) which appear to be illegal on their face. This must be much more serious and apparently something all but the most ravenous Bush authoritarians would never accept. It is supposedly no longer even happening and hasn't been for a few years. So disclosing it could not jeopardize a program. The only reason that suggests itself is that the political and legal consequences of disclosure are too grave to allow.

Late Update: The Post has a follow story on the data mining issue. It covers most of the same ground but hints a little more directly about possible interception of emails and phone calls. The article suggests that examination of "metadata" was the issue here. But, again, it doesn't fit. The intensity of the covering up doesn't match the alleged secret.

So what does match the intensity of the covering up?

First, a word about data mining. That Wiki article will give you all the info you need, I expect, but here's what I'd like to emphasize. You have a vast amount of data, too much for one person or even a dedicated group of people to pore over. Therefore, you use a computer to search out key phrases or data sets to help focus your search. The computer can cut through the chatter and find the key phrases, giving the investigators a greatly reduced amount of data in which to perform more focused searches, or even to simply start laying human eyes upon.

Say you're in the FBI, and you want to hunt terrorists. You know that the terrorists are using the Internet, for example. So you find a way to allow your data mining program to intercept email messages and scan them as they travel down the tubes. The ones with the key phrases get flagged, and the ones that don't are flushed.

This is my question: where do the key phrases come from?

I rather doubt that the terrorists are talking freely about wanton destruction in any way. There's got to be some kind of coded message, and it needs to be rather innocuous sounding small talk to escape detection. "I got oranges at the market today, but I couldn't lay my hands on any rhubarb." And so bin Laden knows that the cell leader talked to one crucial member of the cell but couldn't find another.

How do you data mine a conversation like that? How do you even know what they are talking about?

This is off the top of my head, but tell me why it wouldn't work. You do some initial surveillance. You do the monitoring of telephone calls to known al-Qaeda members outside the country. You come up with a pared-down list of people in the United States that may or may not be talking to the terrorists about terrorism.

Then you track down their email accounts. You feed the telephone conversations into a text analyzer.

And then you crack those emails and telephone conversations open. You use text analysis to identify common phrases and words, you put human eyes on this mass of data to see if humans think these conversations sound fishy, and then you boil it all down to key phrases to focus the larger task of data mining.

And then you do it all over again. You identify people who are using the same key phrases in their emails and telephone conversations. You boil them down, crack open their conversations, and work the process again. Hits begin to accumulate, maybe. Misses gets refined out of the process, maybe. But since the key phrases are likely innocuous sounding, you get hundreds of thousands of misses.

It's the chicken or the egg problem: which comes first, the data mining or the key phrases?

What if, to get a huge jump start on the process, the Bush Administration violated the privacy rights of thousands of Americans, again and again and again? What if career prosecutors were unwilling to accept any of the tainted results because they would never be admissible in a court of law if the original and continued process of validating key phrases became known? What if millions of dollars were thrown into this kind of a program, all to get the vast amount of evidence thrown out and the guilty set free?

Okay, don't listen to that - it's all about this:

Well, well. As we wrote over a year ago, after combining careful examination of how Republicans parse their statements with network engineering knowledge available through open sources:

Long story short: (1) Internet surveillance is Bush’s goal, not voice calls; (2) the Republican “wiretap” talking point is a diversion, to voice, away from from Internet surveillance; (3) Bush’s domestic surveillance system would pose no engineering challenges whatever to NSA. No rocket science—or tinfoil hats—required.

Can we please stop talking about “wiretaps” now? It’s not your voice communications Bush wants. It’s your mail.
Because email and all Internet communication is sent by packets all around the Internet, some of the packets could go outside the United States. That means the entire message could be forfeit. For all we know, they intentionally direct email out of the country so that they can then grab it.

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Gonzales Committed Perjury On Tuesday

From the Associated Press:

WASHINGTON - Documents show that eight congressional leaders were briefed about the Bush administration's terrorist surveillance program on the eve of its expiration in 2004, contradicting sworn Senate testimony this week by Attorney General Alberto Gonzales.

The documents, obtained by The Associated Press, come as senators consider whether a perjury investigation should be opened into conflicting accounts about the program and a dramatic March 2004 confrontation leading up to its potentially illegal reauthorization.

..."The dissent related to other intelligence activities," Gonzales testified at Tuesday's hearing. "The dissent was not about the terrorist surveillance program."

"Not the TSP?" responded Sen. Charles E. Schumer, D-N.Y. "Come on. If you say it's about other, that implies not. Now say it or not."

"It was not," Gonzales answered. "It was about other intelligence activities."

A four-page memo from the national intelligence director's office shows that the White House briefing with the eight lawmakers on March 10, 2004, was about the terror surveillance program, or TSP.

The memo, dated May 17, 2006, and addressed to then-House Speaker Dennis Hastert, details "the classification of the dates, locations, and names of members of Congress who attended briefings on the Terrorist Surveillance Program," wrote then-Director of National Intelligence John Negroponte.


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Cheney Contemplating a Run?

From Think Progress:

This New York Sun editorial explores the idea of Richard Cheney running for president.

Mr. Cheney has virtues as a candidate in his own right. He has foreign policy experience by virtue of having served as defense secretary, and he has economic policy experience, having served as a leading tax-cutter while a member of the House of Representatives. His wife, Lynne, would be an asset to the ticket in her own right, a point made by Kathryn Jean Lopez in a post on the topic at National Review Online back in February. By our rights, Lynne Cheney would make one of the greatest First Ladies in history. Mr. Cheney, in any event, is more than four years younger than Mr. McCain, and, if elected, would be 67 years old at his inauguration, younger than Reagan was when he took office. His health, while a topic of frequent speculation, hasn't interfered with his service as vice president.

Lawrence Kudlow wrote a column a while back saying he hoped President Bush asked Vice President Cheney to run for president in 2008. It was a fine idea then and it still is — not because the current field is particularly weak, but because Mr. Cheney is so much more experienced and shrewd a figure, one who could help settle some of the arguments about the Bush years in favor of Mr. Bush. A White House aiming to get Mr. Cheney elected could also avoid some of the hazards that befall lame-ducks — drift, brain drain, irrelevance. Such a campaign might lift Mr. Cheney 's own standing in the polls.

The vice president's stature would put him instantly into the first rank of contenders on the Republican side. On Monday, speaking in Alabama, the vice president received such a warm greeting that he began his remarks by saying, "A reception like that is almost enough to make you want to run for office again." It is hard to imagine the vice president did not comprehend how tantalizing such a remark would be. He used the same opening line on March 24 when he spoke to the leadership of the Republican Jewish Coalition. This is not an endorsement, and there are things we find attractive about many of the other candidates. But for those of us who are concerned with extending Mr. Bush's campaign for freedom around the world and cutting taxes at home, a Cheney campaign is attractive.

Oh please please please please please please PLEASE don't throw us into that briar patch, Brer Cheney.

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